Don’t ban ride‑sharing. Rethink regulation.

By John Pecman, Commissioner of Competition

A version of this article was published in the Globe and Mail on Thursday November 26, 2015

When was the last time you watched a movie on VHS? In the early 2000s, nobody was talking about banning DVDs to protect those who manufactured VCRs and video tapes. Instead, we embraced innovation, and benefitted from the superior quality of DVDs.

Why then are some regulators taking steps to ban ride‑sharing applications?

Apps, such as those offered by Uber and Lyft, can provide Canadians with more choice, lower prices, and better quality of service. Recent reports found that Uber prices in Ottawa were about 36 percent less than the fare for a taxi, and that passengers in Toronto waited  an average of nine minutes for a traditional taxi, but between two and four minutes for an Uber driver.

Despite these benefits, both ride sharing and taxi drivers – and their customers – are suffering due to taxi regulations that restrict the competitiveness of ride sharing apps in the marketplace.

While the taxi industry is heavily regulated in Canada, ride‑sharing services are not. This creates an uneven playing field in the industry.

Let’s look at the public record:

The City of Toronto laid 208 charges against 104 Uber drivers between 2012 and 2015.

The City of Montreal has seized almost 200 vehicles for allegedly engaging in illegal ride‑sharing since the beginning of 2015, according to media reports.

And the City of Ottawa laid 142 charges against unlicensed drivers believed to be working for Uber between October 2014 and August 2015.

Private transportation is a significant industry in Canada. In 2014 alone, Canadians spent almost $1.2 billion on taxi and limousine services, according to Statistics Canada. The cost of a single taxi plate in 2012 could be as high as $360,000 in Toronto. But since ride‑sharing services were introduced in 2014, the price of taxi plates declined to $188,235.

Thankfully, some municipalities are making room for innovation. They are finding ways for their residents to enjoy the competitive benefits of ride‑sharing apps alongside existing taxi services.

They are on the right track.

The arrival of ride‑sharing services presents an important opportunity for regulators to inject increased competition into the taxi industry by creating a single, level playing field for all. The Competition Bureau supports efforts to regulate ride‑sharing applications instead of prohibiting them. This will allow consumers to benefit from competitive prices on a variety of innovative choices, giving all service providers an equal chance to compete.

To even the playing field, where possible, regulators should relax restrictions on traditional taxis, rather than imposing additional regulations on new entrants in the industry. When new regulations are needed, they should be limited to meeting legitimate policy objectives, like protecting the safety of passengers and drivers.

This is the message that the Competition Bureau is delivering in advice to municipalities across Canada.

We are urging regulators to recognize that the growing sharing economy offers an opportunity to inject greater competition into the Canadian marketplace and give consumers access to a wider range of innovative, high‑quality products and services at better prices.

Needlessly burdensome regulations on the taxi industry—such as rigid fare structures and restrictions on the number of taxis that can operate—need to be reconsidered.

The Competition Bureau is publicly releasing a white paper today, entitled “Modernizing Regulation in the Canadian Taxi Industry.” The Bureau’s view is that municipal and provincial regulations governing the taxi industry must be overhauled to ensure that taxis and ride‑sharing services can compete on an even playing field. Key recommendations include:

  • Easing price controls, such as regulated taxi fares, to allow fares to be adjusted during periods of varying demand, such as weekends, evenings and bad weather.
  • Eliminating restrictions on the number of taxi plates issued and moving to a system where additional qualified drivers may operate as vehicles‑for‑hire.
  • Allowing all drivers to respond to street hails, regardless of whether they work for a taxi company or ride‑sharing service, unless there is a compelling policy reason not to do so.
  • Providing incentives to drivers to operate accessible vehicles in areas where consumers are under‑served.

Good public policy favours the public interest rather than any one company, individual or industry. We say: set new rules for all players. Do not impose existing taxi regulations on ridesharing services.

We are calling on taxi regulators to seize the opportunity presented by the sharing economy, to create a single, level playing field where innovation —and competition—can flourish. Think about what innovation can bring the next time you watch a DVD. Or perhaps you’ve moved on to live‑streaming.

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